Morning Minutes 5/25/2020

Morning Minutes

World Markets Hold Steady in US Holiday Trading; Canada Bank Earnings Preview

May 25, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

As is common on days when US stock exchanges are closed, other markets around the world have been holding steady. Over in Europe, major continental indices are up led by the Dax up 2.2% and Paris up 1.4%. In Asia Pacific trading Chinese markets were steady while Tokyo gained .7% and Sydney rallied 2.2%. US index futures were open for some of the early morning hours and traded up about 1.0% before closing for the holiday.

There were protests in Hong Kong over the weekend and more discord between the US and China but investors still appear to be more focused on economies reopening at the moment. Germany reported an in-line Q1 GDP update at (1.9%), but investors there appear to be focusing more in the IFO monthly business survey which had better than expected results in expectations (80.1 vs street 75.0) and business climate (79.5 vs street 78.3) In commodity trading WTI crude oil is up 0.8% trading near $33.50, while copper is up 1.0%.

Bank of Canada Governor Poloz is speaking today who could give an update on how the economy is doing, but since his term ends on June 2, it will likely be left to incoming Governor Macklem to indicate future direction at some point. More importantly, it’s bank earnings week in Canada with Scotiabank and National Bank reporting Tuesday, Bank of Montreal and RBC reporting on Wednesday and CIBC plus TD reporting on Thursday. As occurred when US banks reported last month, investors may focus on changes to loan loss provisions with banks exposed through lending to several vulnerable sectors of the economy including real estate, airlines, energy, retailing and others.

In the US, there aren’t any significant earnings reports this week, but some of the usual month-end reports like durable goods, personal income and Chicago PMI are due later in the week.

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